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You can withdraw 90 per cent of EPF money to buy house, pay home loan EMI; here's how

The norms to withdraw Employees Provident Fund (EPF) have been relaxed further to enable members of the EPFO to withdraw money from their EPF accounts to fund the purchase or construction of house or flat or to buy land.

By Renu Yadav

Tuesday, April 25, 2017

The norms to withdraw Employees Provident Fund (EPF) have been relaxed further to enable members of the Employees' Provident Fund Organisation (EPFO) to withdraw money from their EPF accounts to fund the purchase or construction of house or flat or to buy land. Also, they will be able to use their monthly PF contributions in part or full towards repayment of home loans. These will help 4 crore EPFO members to fulfil the dream of owning a house.

Take a quick look at the new norms for PF withdrawal: 1) EPFO members will be able to withdraw up to 90 per cent of their accumulation (employer's as well as employee's contributions, including interest) in the PF account or the cost of the property, whichever is less to provide for the purchase or construction of house/flat or for buying land.

2) Monthly instalments can be made from the PF money against any outstanding loan in the name of the EPFO member or spouse, provided both are EPFO members.

3) For payment of equated monthly instalment (EMI) through one's EPF account, banks or lending institutions will consider the contributions made to an employee's PF account over the past three months to calculate the EMI.

4) Withdrawals are possible only if all the three following conditions are met:a) The employee is a member of EPFO for at least three years.b) The accumulation in the member's PF account (or together with the spouse), including the interest, has to be more than Rs 20,000.c) It can be withdrawn only once.

5) Withdrawal from the EPF was possible earlier, but only after a person has been an EPFO member for at least five years. Earlier, EPFO members were allowed to withdraw up to 36 months of basic salary plus dearness allowance for purchase or construction of house/flat and 24 months of basic salary and dearness allowance for purchase of land.

6) Payment will be made by the EPFO directly to the housing society or the government agency or the bank or the prime lending institution, and not to the member of EPFO.

7) If the member fails to get allotted a dwelling or a flat or in case of cancellation of the allotment, the amount has to refunded to the EPFO within a period of 15 days.

8) If the amount withdrawn exceeds the actual money spent, the excess money should be refunded in lump sum within 30 days of finalisation of purchase or construction of house or flat.

9) To withdraw money under this scheme, the EPFO member has to be a member of the co-operative society or a society registered under any law for housing purpose and should have at least 10 members. Withdrawals are also allowed for repayment of monthly instalment of loan to a bank or any lending agency. 10) The scheme is part of the government's agenda of Housing for All. The government has recently launched a scheme called Pradhan Mantri Awas Yojna under which people, whose annual income is less than a specified amount and who do not own any house in the name of any family member anywhere in India, can avail an interest subsidy of up to Rs 2.20 lakh.